Arizona's sports betting market saw a surprising turn in September, with a significant increase in betting volume year-over-year, but adjusted revenue slid to its lowest point in over three years. Data shows that while consumer spending rose, operator revenue did not increase but instead declined, raising questions about what happened.
Betting Volume Increases but Revenue Declines
In September, Arizona's sports betting volume reached $851.3 million, up 16.3% from last October and a whopping 39.4% increase from $610.7 million in August. Most of the bets came online, amounting to $847 million, while retail stores contributed only $4.4 million. However, the revenue picture was not so rosy, with adjusted gross revenue before free bets at $55 million, down 28.9% from the same period last year and a drop of 8.2% from August.
Adjusted Revenue Falls to a Low
After deducting $35.4 million in free bets and promotional costs, September's final adjusted revenue was only $19.6 million, the lowest monthly total since July 2022, down 48% year-over-year and a 53.1% decrease from the previous month. The state government's share before deductions was 6.46%, but only 2.3% remained after deductions, significantly reducing the earnings.
Operator Market Performance Rankings
FanDuel remains the market leader, with adjusted revenue of $8.5 million in September and a betting volume of $254.5 million, yielding a 3.34% revenue rate. DraftKings was second, with revenue of $4.3 million, but a higher betting volume of $270.2 million, holding a 1.59% share. BetMGM and Caesars Entertainment followed closely, with revenues of $4.2 million and $1.7 million, respectively. Other operators like Fanatics and Bet365 had almost no revenue for the month.
Tax Contributions Mainly from Online
From a tax perspective, sports betting brought in $1.9 million in revenue for Arizona in September, with the vast majority coming from online gambling, contributing only $79,416 from offline. Overall, the market remains hot, but the profit pressure is significant.
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